- Joined
- 20 November 2005
- Posts
- 787
- Reactions
- 92
so_cynical, Your logic is full of contradictions;
yet,
Somehow you have, using hindsight with this example, been able to distinguish between the final capitulation of the stock and the intermediate retracements. Indeed, the retracements you held through on the way up were 45%, which on that basis means exiting at $6.50 on the way back down, not up above $10.00. A true buy and hold does not make that distinction, indeed making that distinction is why extremely successful investors exist because the majority can't make that distinction, which is why/how a trend following system works.
You also quote...
...what is a spectacular profit?
In 2002 you could have bought FMG for about 1c, then sold it 12-months later for 28c. Is that not a spectacular profit? I'd suggest it is, as would most.
When do you exactly decide to "only possible if u buy and do nothing" or "sell at spectacular profits"?
The other flawed argument with buy & hold is always the use of the historical perspective that is always used. Who here would think, 'gee, if only I had bought FMG when it was 10c..." Firstly you can't now. The logic stands then that you buy the 'next up and comer' but most people do not realize that FMG traded in a sideways band for 10-years before breaking out in 2002.
Which begs the question on 'when' to initiate a buy and hold, because you can't (yet anyway) buy FMG at 2005 prices so it's reasonable to assume that you would have bought higher. If so a true buy & hold would be still holding the bag, which I can assure is why most people's SMSF are hurting so much.
CBA has given back everything since 1999 which means, on an ex-dividend basis, that anyone who bought after 1999 is out of the money. Someone who touts the buy & hold strategy will say, "yes but if you had bought in 1992 you'd still be well ahead". Yes, but, you can't NOW buy at 1992 levels. You can buy at todays levels, last months levels, last years levels, 2007 levels, 2006 levels, 2005 levels etc etc etc and you'd be losing.
A good trend following system will outperform buy & hold on an ongoing basis from today .
Here are some CBA trades using my long term trend following model that is perfect for the SMSF. We'll discount the first trade on the basis that it wasn't important enough to be included in the universe (which is another reason why the FMG example is possibly flawed).
A $10,000 investment would now be worth $31,202.
A $10,000 buy & hold investment, assuming you made that in 1995, would be also be worth about the same, but the issue here is making that buy & hold decision after 1999 - that's 10-years ago, has been a losing proposition. It may eventually turn out that making that buy & hold decision in 1995 will also be a losing proposition.
yet,
Somehow you have, using hindsight with this example, been able to distinguish between the final capitulation of the stock and the intermediate retracements. Indeed, the retracements you held through on the way up were 45%, which on that basis means exiting at $6.50 on the way back down, not up above $10.00. A true buy and hold does not make that distinction, indeed making that distinction is why extremely successful investors exist because the majority can't make that distinction, which is why/how a trend following system works.
You also quote...
...what is a spectacular profit?
In 2002 you could have bought FMG for about 1c, then sold it 12-months later for 28c. Is that not a spectacular profit? I'd suggest it is, as would most.
When do you exactly decide to "only possible if u buy and do nothing" or "sell at spectacular profits"?
The other flawed argument with buy & hold is always the use of the historical perspective that is always used. Who here would think, 'gee, if only I had bought FMG when it was 10c..." Firstly you can't now. The logic stands then that you buy the 'next up and comer' but most people do not realize that FMG traded in a sideways band for 10-years before breaking out in 2002.
Which begs the question on 'when' to initiate a buy and hold, because you can't (yet anyway) buy FMG at 2005 prices so it's reasonable to assume that you would have bought higher. If so a true buy & hold would be still holding the bag, which I can assure is why most people's SMSF are hurting so much.
CBA has given back everything since 1999 which means, on an ex-dividend basis, that anyone who bought after 1999 is out of the money. Someone who touts the buy & hold strategy will say, "yes but if you had bought in 1992 you'd still be well ahead". Yes, but, you can't NOW buy at 1992 levels. You can buy at todays levels, last months levels, last years levels, 2007 levels, 2006 levels, 2005 levels etc etc etc and you'd be losing.
A good trend following system will outperform buy & hold on an ongoing basis from today .
Here are some CBA trades using my long term trend following model that is perfect for the SMSF. We'll discount the first trade on the basis that it wasn't important enough to be included in the universe (which is another reason why the FMG example is possibly flawed).
A $10,000 investment would now be worth $31,202.
A $10,000 buy & hold investment, assuming you made that in 1995, would be also be worth about the same, but the issue here is making that buy & hold decision after 1999 - that's 10-years ago, has been a losing proposition. It may eventually turn out that making that buy & hold decision in 1995 will also be a losing proposition.